From O to AAA: Hearst Takes Stake in Fitch

Hearst, whose vast media holdings include O: The Oprah Magazine, is taking a small step into the credit-rating business.

The privately held company has agreed to pay $592 million for a 20 percent stake in Fitch Group, which operates credit research firm Fitch Ratings.

The deal was announced Wednesday by Fimalac, Fitch’s France-based holding company, which said it will keep the remaining 80 percent stake and a majority of the board seats.

The transaction price was based on a total enterprise value of $4.34 billion for Fitch, Fimalac said.

The announcement comes just a few weeks after United States lawmakers held a hearing to consider whether the credit rating industry, which is dominated by three major firms, needs tighter oversight from regulators.

It is not clear if the deal is prelude to a full takeover by Hearst. But the stake sale comes with a complex set of rules that give each party the first right to buy shares offered for sale by the other, according to Fimalac’s press release.

McGraw-Hill, another media company, owns Standard & Poor’s, one of the leading credit rating firms. Moody’s, the third of the Big Three, was spun off from Dun & Bradstreet in 2000.